Short time-scale radio variations of compact extragalactic radio sources, known as IntraDay Variability, can be explained in at least some sources by a source-extrinsic effect, in which the variations are interpreted as scintillation of radio waves caused by the turbulent ISM of the Milky Way. One of the most convincing observational arguments in favour of propagation-induced variability is the so called annual modulation of the characteristic variability time-scale, which is due to the orbital motion of the Earth. Data for the recently discovered and highly variable IDV source J1128+5925 are presented. We study the frequency and time dependence of the IDV in this compact quasar. We measure the characteristic variability time-scale of the IDV throughout the year, and analyze whether the observed changes in the variability time-scale are consistent with annual modulation. We monitored the flux density variability of J1128+5925 with dense time sampling between 2.7 and 10.45GHz with the 100m Effelsberg radio telescope of the MPIfR and with the 25m Urumqi radio telescope. From ten observing sessions, we determine the variability characteristics and time-scales. The observed pronounced changes of the variability time-scale of J1128+5925 are modelled with an anisotropic annual modulation model. The observed frequency dependence of the variation is in good agreement with the prediction from interstellar scintillation. Adopting a simple model for the annual modulation model and using also the frequency dependence of the IDV, we derive a lower limit to the distance of the scattering screen and an upper limit to the scintillating source size. The latter is found to be consistent with the measured core size from VLBI.